Homage to the heard instinct: Tim Melville-Ross

TIM MELVILLE-ROSS is keen to be seen as an entrepreneur. Previously chief executive of the Nationwide Building Society, he took over last month as director-general of the Institute of Directors, the 48,000-member lobby group for small and medium-sized businesses.

Progressing from company secretary to chief executive of Britain's second largest building society over 13 years might seem bureaucratic rather than entrepreneurial. And Nationwide certainly saw some rather unentrepreneurial hiccups during Melville-Ross's decade on the board. There was the largest-ever bad debt provision made by a society, in 1992, followed by a decision to relocate to Swindon only six months after the society had moved into a plush new London HQ.

Melville-Ross has been cultivating his risk-taking image with casual references in interviews to his pounds 3,000 stake in an Essex garage and second-hand car dealer, the Village Garage at Pebmarsh. But this hardly makes him a gambler for high stakes. 'It's perfectly viable but it's a marginal business, there's no doubt about it,' he says.

Rather more of his money may be at stake, however, in Tomatis Centre UK, a business due to be launched in November by his stepsister, Sally Smith, and her husband, Alex.

About 300 Tomatis centres exist worldwide, applying the techniques of Alfred Tomatis, a Paris professor of ear, nose and throat surgery, to the treatment of children with behavioural and learning problems, musicians with hearing disorders, sufferers from stress-related ailments and even students of foreign languages.

The principle behind his 'listening cure' is that communication or learning disorders originate from impaired or underdeveloped listening skills. Treatment involves listening to a tape of music, speech or the subject's own voice which has been electronically doctored.

Mrs Smith is a glamorous, forceful former controller of planning at Scottish Opera, who made her singing debut at Glyndebourne about 30 years ago, at the age of 17. She met Alex at Scottish Opera, where 'I was Madame Artistic and he was Mr Financial' - or to be exact, a chartered accountant who later specialised in employee share ownership.

The Smiths have tried a range of treatments for their son Luke, 12, who was brain- damaged at birth and suffers from genetic disorders, and are convinced that the Tomatis method works. For the past three years, they have been travelling to France, where there are 90 centres specialising in the technique.

It did not take long before the idea of setting up a British centre occurred to them. But it was only when Mrs Smith inherited a large Victorian house in Lewes, Sussex, with the potential to house four treatment rooms that it became possible - subject to final consent from the planners 'who seem to think it's a bit New Age'.

It is not alternative, Mr Smith says, just an alternative to existing conventional treatments. He and his wife are putting equity of pounds 15,000 into the business. How much Melville-Ross will provide is yet to be finalised, but the other investments, such as that from a London and Hong Kong-based businessman who suffers from tinnitus (ringing in the ears), have been in chunks of pounds 15,000. The Royal Bank of Scotland is providing a working capital facility of around pounds 35,000, secured on the house.

This may sound a risky investment for a controversial therapy that is not available on the NHS. But conventional medicine has little to offer children in this condition.

So Tomatis Centre UK, which plans to charge pounds 195 including VAT per week of treatment, has a waiting list of 80. The Japanese-made equipment costs pounds 53,000 and there is a licence fee of pounds 1,850. The worst case turnover forecast is for pounds 181,000, excluding VAT, in the first year. The best case, of pounds 332,000 ex VAT, gives a surplus of pounds 60,000 in year two.

The Smiths, who have trained in the technique, provide accommodation for a Paris-trained psychologist and eventually plan to take a combined salary of pounds 45,000. Otherwise it is mostly sunk cost.

The main risk is on the demand side. It is not clear whether health insurance companies will pay for the treatment. Challenged as to whether the method really delivers, Mr Smith says: 'It works, all right. Tomatis treated Maria Callas and helped teach Gerard Depardieu to speak English. When Depardieu talked about the technique on TV, the Paris centre got about a thousand new clients.'

Why hasn't anyone set up a Tomatis centre here already? Mr Smith laughs. 'I recall the German poet Heinrich Heine who was asked where he wanted to be at the end of the world and said: 'England. Because everything happens in England usually 50 years after it has happened everywhere else.' '

Melville-Ross, who has worked hard on the plans, says he is not sure how far the Smiths would want to expand the business. Doing business with family can be difficult. But it is exactly what many of the experts on the 'equity gap' in finance for small businesses prescribe. Venture capitalists are too expensive for small deals, bank finance is easily withdrawn, and business angels are rare.

As Melville-Ross says: 'Why should it just be the ethnic communities who back family enterprise with cash, accommodation and a helping hand?'

If his own experiment works, the Institute of Directors' voice on the issue will be the more cogent for it.

(Photograph omitted)